Re: S=I, an old debate.

[Chas Anderson <chasna@xxxxxxxxxxx>]

At 02:16 PM 8/15/98 -0700, you wrote:
>Louis-Philippe Rochon had written:
>http://csf.colorado.edu/mail/pkt/nov97/0113.html
>
>"Saving must always follow investment.  It is the sine qua non of the
>system.  Money is introduced through bank loans used to finance
>investment...Moreover, S is not brought into equality through changes in
>income, as is explained in the theory of effective demand.  Rather, S is
>always equal to I, in all periods and at all times.  Surely, this is an
>old debate."
>
>Leigh Harkness commented:
>http://csf.colorado.edu/mail/pkt/nov97/0196.html
>
>"Rather than looking at saving and investment, let us ask the question
>whether expenditure can exist before income (production).  That appears
>to be a bit like asking: which came first, the chicken or the egg."
>
>Paul Davidson then responded:
>http://csf.colorado.edu/mail/pkt/nov97/0206.html
>
>"Which came first is a rather silly dispute.  Current saving (as opposed
>to savings, i.e., the accumulation of past saving) is a flow out of
>current income and income is a flow--hence both current saving and
>current income are simultaneous flows.  Neither comes first."
>
>Davidson is correct.

Davidson side-steps the priority problem by using a definition of saving
that doesn't really tell us "what it is," only that it is part of something
else, which he also doesn't define.

Chas